EN16931: Compliant and Efficient Invoice Processing

EN16931 aims to ensure uniform, compliant e-invoicing—but reality differs. Despite established formats like ZUGFeRD and XRechnung, many suppliers still struggle to issue error-free invoices. Missing mandatory fields, incorrect XML mappings and discrepancies between PDF and XML complicate automated processing, often resulting in costly consequences for recipients. How can you overcome these challenges?

What is EN16931?

The European standard EN16931 forms the basis for standardized e-invoicing in the EU. It enables a uniform, structured and machine-readable exchange of invoice data—regardless of national specifics or individual company requirements.

Before the introduction of EN16931, Europe had a wide variety of invoice formats that were often incompatible, making seamless digital processing difficult. This led to high costs and significant manual effort for businesses and public authorities. The standard serves as a key technological foundation for the European Commission’s ViDA initiative and Germany’s B2B e-invoicing mandate. EN16931-compliant invoices will play a crucial role, as ViDA requires structured, machine-readable data transmission to tax authorities.

EN16931 defines a standardized data structure for electronic invoices that can be used in both XML-based formats like XRechnung and hybrid formats like ZUGFeRD. It precisely specifies the mandatory information that an invoice must include, such as:

• Invoice number and date
• Seller and buyer details, including VAT IDs
• Description of the delivered goods or services
• Tax information, such as VAT rates and amounts
• Payment terms

This structure enables software solutions to automate processing, validation and legally-compliant archiving of invoices.

Companies that send or receive electronic invoices within the EU must ensure their systems comply with EN16931. While many ERP and accounting systems already support the standard, experience shows that incorrect invoices remain a major challenge—whether due to missing mandatory fields or incorrect data.

Common compliance issues with EN16931

Although both ZUGFeRD and XRechnung are based on EN16931 and, in theory, comply with the legal requirements of the German VAT Act (§14 UStG), the Fiscal Code (AO), and the Commercial Code (HGB), errors frequently occur in practice. However, adherence to this standard is essential for the legal recognition and seamless processing of e-invoices. Careful preparation, choosing the right format and conducting regular checks and tests help prevent the following errors:

• Wrong or missing mandatory data
  Although certain details are required for tax purposes, e-invoices often lack essential information from invoice date to invoice number. In the case of XRechnung, for example, the service date is not explicitly defined as a mandatory field. However, the invoice recipient must still verify it in accordance with legal requirements. In this case, the invoice must be rejected under Section 14 of the German VAT Act (Umsatzsteuergesetz). In addition to missing information, errors or incorrectly structured XML entries can also occur. The supplier’s tax ID could also mistakenly be entered in the field intended for the invoice number.
• Discrepancies between PDF and XML
  ZUGFeRD is a hybrid format that provides machine-readable XML structures while also including human-readable text files. Discrepancies between these two views are not uncommon, which can complicate handling and further processing and may even lead to compliance risks.
• Incomplete legal information
  Section 14 of the German VAT Act (UStG) and other legal requirements, such as the Fiscal Code (AO) or the Commercial Code (HGB), mandate certain minimum details on invoices. While these details are often present in the PDF version, they may be missing in the embedded XML structure or vice versa.
• Inadequate archiving and retention obligations
  Insufficient or improper archiving can lead to legal issues. EN16931 requires e-invoices to be stored in compliance with statutory retention requirements. Businesses must ensure that invoices are securely archived in an audit-proof manner and remain accessible for the required retention period. Non-compliance can have tax-related consequences and jeopardize traceability and overall compliance.

Consequences of deviations from EN16931

The errors described above pose a significant risk for invoice recipients. Accepting a non-compliant invoice can lead to potential tax-related consequences, increased costs or extended processing times in purchase-to-pay workflows. The consequences of such errors include:

• Delays in invoice processing
  Missing or incorrect information can prevent invoices from being processed automatically. This leads to additional manual checks, follow-up inquiries with the issuer and longer processing times.
• Rejection of invoices and payment delays
  If a required detail is missing or the invoice format does not meet the specifications, the invoice may be rejected. This can lead to payment delays and may result in missed early payment discounts or non-compliance with legal payment deadlines.
• Tax risks
  If an issued invoice does not comply with EN16931, the tax authorities may deny the input tax deduction, potentially leading to financial losses.
• Compliance and liability risks
  Businesses are required to accept only compliant invoices. Posting a non-compliant invoice can lead to violations of both tax and commercial regulations. In the event of an audit, companies may face penalties or additional payments.
• Challenges in archiving and traceability
  As previously mentioned, invoice recipients must archive all e-invoices in a legally compliant and audit-proof manner for the required retention period. Errors or incomplete invoices can make traceability more difficult, even retroactively, and may lead to issues during audits.

There are freely available online tools that can check incoming invoices for completeness and validate the XML structure. However, in practice, the depth and level of detail in their validation results can vary. Many of these tools focus solely on technical format validation without considering legal compliance.

For example, the service date is optional in the XRechnung standard but mandatory under German VAT law (UStG). As a result, a tool may classify an XML invoice as “valid,” but this does not necessarily mean it is legally compliant for tax purposes.

SEEBURGER supports your EN16931-compliant e-invoicing

It will likely take some time before all market participants, especially smaller suppliers, have fully adapted their processes.

The experience of many companies shows that faulty electronic invoices are not just frustrating for recipients but can also pose potential legal and tax risks. The SEEBURGER Purchase-to-Pay solution, with full integration into SAP and our ERP-independent Invoice Portal Service, helps you avoid these pitfalls.  Your benefits are:

• Automatic verification of the formal and content-related completeness of incoming invoices in various formats, including ZUGFeRD and XRechnung
• Reliable validation measures in compliance with tax regulations, including critical fields such as the service date
• Efficient process control through workflows to ensure that missing data is requested in a targeted manner, eliminating the need for manual interventions or individual workarounds.

Source: https://blog.seeburger.com/en16931-compliant-and-efficient-invoice-processing/